InvestorQ : Are futures high risk to trade or we can trade them carefully also?
Aashna Tripathi made post

Are futures high risk to trade or we can trade them carefully also?

Answer
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Ayushi Kampani answered.
2 years ago


Futures are one of the most popular derivative products in the stock markets. You have futures on stocks and you also have futures on indices like Nifty, Bank Nifty and Sensex etc. There are also futures on commodities but we will not get into all that right now. Futures are based on an underlying, which could be the stock or an index. They are called futures because they are contract that pertain to a future date. So if you are positive on a stock you can also buy futures and if you are negative on a stock then you can sell futures. As simple as that!

Warren Buffet may have referred to futures as weapons of mass destruction. But there is a method in the madness. While you can get away with mistakes in the cash market, your margin for error in futures is limited. But it has some amazing advantages. It combines the best of leverage, economy and efficiency. Futures manage your risk and also spur your investment yield. But discipline is the key, if you want to really make the best of futures.